It started last year, and many times since then, when I received email from a company that claimed to modify my mortgage for a fee. They promised to negotiate lower interest rates and/or principal on loans so my household could afford our monthly payments and stay in our homes. Luckily, we did not have a problem, and still don’t – and I thank God for that. We have no debt except our monthly mortgage.

I did some research and found out that when times are tough, scam artists know just how to exploit a desperate situation. That is especially true in mortgage industry where foreclosure are so abundant. Almost everyday, we hear about it in the news.

Unlike legitimate loan modification services, rip-offs require the homeowner to pay an upfront fee – usually in the range of $500 to $1,500. Once the homeowner pays up, the scam artist takes the money and runs. While there are no official estimates on how many phony loan modification companies are out there, housing advocates say they are on the rise.

The mortgage modification industry started a few years ago as the present credit crunch began and troubled homeowners with adjustable rate mortgages were left with few options to avoid foreclosure. These companies would contact consumers who are behind in their mortgage payments either by email, postal mail or fliers placed under front doors, and would offer homeowners one last shot at keeping their home.

Now many consumers are vulnerable. They are already in heavy debt because of their free spending behavior using their credit cards and personal loans. Therefore, to them, these companies are god-send. Who wouldn’t want to get out of this mess we are in with a lousy $500, $1,000 and even $1,500 in fees? That is nothing compared to losing your home.

Homeowners beware

These con artists never actually negotiate with the lender. On top of that, to make matters worse, some homeowners stop making mortgage payments thinking that everything is being taken care of. Eventually, however, they realize they have been had and, in some case, it’s too late to save their home.

Legitimate companies

Luckily, there are legitimate companies out there, but homeowners need to check their credentials first. Over the past six months, a rash of former real estate professionals have rushed into this new field without adequately familiarizing themselves with modification procedures and lender guidelines. These former agents are not con artists. They are legitimate. They mean well. You just have to ask about their credentials and make sure they would do the job for you to your satisfaction.